State insurance regulators are wishing they had more information about how three major Patient Protection and Affordable Care Act (PPACA) will really affect insurers’ finances.
Regulators in many states have already approved 2016 rates, but they still do not know how much specific insurers will get from, or pay into, the PPACA “three R’s” programs.
Members of the Health Reform Solvency Impact Subgroup and the Health Care Reform Actuarial Working Group, parts of the National Association of Insurance Commissioners (NAIC), have been talking about the three R’s data lag during conference calls, according to copies of call minutes included in NAIC summer meeting packets.
Regulators on the panels have been looking into adding a state-by-state three R’s table to the Supplemental Health Care Exhibit (SHCE) Part 1. The SHCE is part of the “blank,” or collection of forms, a health insurer must fill out when it sends its annual statement to insurance regulators.
The U.S. Department of Health and Human Services (HHS) already requires health insurers to send it three R’s information using a risk corridors and medical loss ratio (MLR) report filing system. The NAIC has also added a form to the annual statement blank that a health insurer is supposed to use to estimate the possible effect that inaccurate three R’s forecasts could have on its risk-based capital (RBC) level.
An RBC level is a measure regulators use to determine if an insurer seems to have enough capital to support the policies it has sold.
Kevin Dyke, a Michigan regulator, said during a conference call in May that regulators would like to add a three R’s table of their own to the 2016 blank because they were not sure how, or when, they’d get the HHS three R’s data.
The proposed table would also provide information better aligned with the kind of information actuaries use to review health rates, according to Steve Ostlund, an Alabama regulator.
Joe Zolecki, of the Blue Cross and Blue Shield Association, and Max McGee, of America’s Health Insurance Plans (AHIP), said regulators should either stick with the HHS data or use the preliminary national data given in the RBC section of the blank.
Otherwise, Zolecki said, an insurer will have to send preliminary three R’s data to every state in which it does business, even though the actual HHS data will be available a few months later. Insurers wouldn’t actually submit the information in the table until April 2016, and the first rate filings regulators could apply the results to would be the 2017 rate filings, Zolecki said.
Zolecki and William Weller of AHIP have also sent regulators a letter suggesting that the NAIC help states pull three R’s data from the 2014 HHS MLR report.
The Health Actuarial Task Force, the parent of the Health Care Reform Actuarial Working Group, has approved a working group report that includes a three R’s SHCE addition.
The solvency working group decided against forwarding its three R’s table proposal to the NAIC’s Blanks Working Group.
The three R’s programs include a reinsurance program that will use a broad-based insurance market fee to help issuers of fully PPACA-compliant individual coverage pay the bills of patients with catastrophic claims in the 2014, 2015 and 2016 benefit years; a risk corridors program that’s supposed to shift PPACA exchange plan issuers with good results in 2014, 2015 and 2015 to issuers with poor results for those years; and a risk-adjustment program that’s supposed to shift cash from issuers in a market with relatively low-risk enrollees to market competitors with relatively high-risk enrollees.
The Centers for Medicare & Medicaid Services (CMS) has given insurers preliminary information how the reinsurance program will work, and rough estimates of risk-adjustment program cash transfers, but no information about risk corridors program transfers. CMS has acknowledged in a memo posted last week that, in some cases, it may be unable to collect the full amount from an insurer that owes a payable to get the cash to the insurer’s competitors by the normal transfer date.